Support to incapacity benefits claimants through Pathways to Work - Public Accounts Committee Contents

3  Applying the lessons from Pathways to Work

16. Pathways performance has not been in line with expectations and its precise contribution to a reduction in the volume of people claiming incapacity benefit cannot be measured.[40] The Department made a number of mistakes in the Pathways to Work programme that must be avoided in future programmes. It reported that is making a number of improvements ahead of the new Work Programme, drawing on its experience of Pathways.

17. The methodology used by the Department to assess the impact of the programme in pilot areas was flawed because it sampled people who made an inquiry about claiming incapacity benefits, not those who actually went on to claim.[41] This meant that the Department was not able to tell what the employment impact of Pathways for actual claimants was prior to the national roll out of the programme. At the time of the evaluation, the Department said that it had no reason to think that there would be a difference between the two groups,[42] a view shared by its evaluation panel at the time.

18. The Department accepted, with hindsight, it should have evaluated the Pathways pilot to include both those who enquired about incapacity benefits and those who actually started on the benefit.[43] The Department nevertheless believes that it took a sound and responsible decision in rolling out the Pathways programme nationally.[44] Having a more realistic approach to evaluation sampling and more thorough piloting would have provided a stronger basis on which to assess the cost effectiveness of a programme that has so far cost in excess of £750 million.[45]

19. In 2008-09 some £94 million was spent on additional support through Pathways for new incapacity benefits claimants, but this did not increase the likelihood of someone finding work.[46] The Department did not indicate when it intends to stop spending money on these elements of additional Pathways employment support but accepted that they have not added value and that lessons need to be learnt for future employment support delivered in the Work Programme. Only the early medical assessment introduced as part of Pathways and now incorporated into the Employment and Support Allowance, and the prospect of a more active process requiring claimants to participate in work focused interviews whilst in receipt of benefits appears to have reduced claimant numbers.[47]

20. Failure to attend a Pathways work-focused interview for those claimants who are required to participate in the programme can lead to a benefit reduction of around 25%. In contrast to Jobseeker's Allowance, the Department does not hold reliable data on the proportion of incapacity benefits claimants who are 'sanctioned' in this way, and this is a significant weakness.[48] The Department recognises that the rate of sanctioning is low but the absence of robust data gives no reliable basis for exploring why that might be the case.[49] It is therefore impossible to determine the impact of sanctions on this claimant group. The Department agrees that this is a weakness and is something that it needs to examine further to inform the design of the Work Programme.[50]

21. The Department also needs to counter the risks of providers investing resources in 'easier to help' claimants in order to receive outcome payments,[51] and should do more to create the right incentives to providers to help all claimants find work. Providers and the Department agree that a model of differentiated contract payments, in which outcome payments vary according to how difficult a claimant is to support back into work, would offer a better incentive structure.[52] The effectiveness of this approach depends on being able to devise a model which accurately costs and predicts likely claimant behaviour, something the Department has not yet been able to do.[53] Although the Department has learnt a lot about claimant behaviour from Pathways, it is essential that changes to the payment model are not made to the detriment of value for money.[54]

22. The Department requires Pathways providers to retain documentary evidence for all the jobs they claim to have achieved, but checks only a 10% sample.[55] Whilst the Department believes it has improved the level of control over provider payments in recent years, the level of checks appears insufficient given the risks and value of payments.[56] There is no independent validation of payment claims with the employer or claimant, and no routine basis for reviewing the rest of a contractor claim where an error in the 10% sample of claims is found.[57] This leaves a significant gap in the controls in place to detect erroneous or fraudulent claims by providers.

23. Prime providers have referred only 12% of participants to their subcontractors, choosing to work directly with the remaining 88%[58] This concentration of work with prime providers does not appear consistent with the Department's commissioning strategy and its objective of maintaining a healthy welfare-to-work supplier market.[59] The Department accepted that it needed to learn lessons about the treatment of subcontractors and its 'line of sight' to subcontractors delivering frontline services, though it remains adamant that its principal relationship is with the prime provider.[60] The Department is now asking organisations bidding for contracts under the Work Programme to provide, at an early stage, much more detailed information on their supply chain policy and experience.[61] Recognising this as a gap, the Department has introduced a new accreditation system ('Merlin') to set out its expectations for supply chain management and to grade providers according to their performance.[62]

24. Significant progress in reducing claimant numbers appears dependent on the introduction and roll out of the new medical assessment for all incapacity benefits claimants. Around 38% of new claimants have so far been found capable of work and not eligible for the Employment and Support Allowance, potentially increasing the volume of claims for Jobseekers Allowance.[63] The Department plans to pilot the new medical assessment with existing claimants in Aberdeen and Burnley later this year, before rolling it out to all existing claimants by 2014. It is important that the Department understands fully the impact this roll out might have on claims for other benefits and the capacity of Jobcentre Plus to process these in light of the Government spending review.[64] Until piloting work is complete, the Department admits it does not know precisely what proportion of existing claimants who are re-assessed will go on to claim Jobseeker's Allowance where they are found 'fit for work' under the new assessment criteria.[65]

25. A measure of the success of the new medical assessment will be the level of benefit appeals which result in the Department's decision being overturned. The Department reported that around one in three claimants has so far appealed against its decision to disallow the benefit, with fewer than half (40%)[66] being successful on appeal.[67] This represents a significant proportion of claimants whose appeal is upheld and the Department should look to reduce this rate over time, in particular, monitoring rates for existing claimants who are due to be re-assessed against the new criteria.

26. Claimants who do not qualify for incapacity benefits may transfer to Jobseeker's Allowance. These claimants are likely to require more targeted interventions, given that many will have been claiming incapacity benefits for a long time and may need additional support to find work.[68] There remains a risk that these claimants will be transferred from one benefit to another rather than finding work and leaving benefits altogether.[69]

40   Qq 126-129, 134, 158-159 and 166 Back

41   C&AG's Report, para 11 Back

42   Qq 136-138 Back

43   Qq 163-164 Back

44   Qq 141-142 Back

45   Qq 150, 161, 164 and 179 Back

46   C&AG's Report, para 29 Back

47   Q 150 Back

48   Q 168 Back

49   Q 169 Back

50   Qq 168-170 Back

51   C&AG's Report, para 4.13 Back

52   Qq 18, 89-92, 107-108, 123-124 and 131 Back

53   Q 134 Back

54   Q 133 Back

55   Q 170 Back

56   C&AG's Report, para 4.3 Back

57   Qq 18 and 170 Back

58   Qq 98-99 and 154; C&AG's Report, para 4.7 Back

59   Q 154 Back

60   Qq 171-172 Back

61   Q 154 Back

62   Qq 155-156 Back

63   C&AG's Report, para 26 Back

64   Qq 151, 185-186 and 189 Back

65   Q 152 Back

66   Employment and Support Allowance: Work Capability Assessment: Official Statistics, July 2010 at: Back

67   Q 184 Back

68   Qq 182 and 183 Back

69   Q 184 and 188 Back

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